Trump Should Stop The Government’s Price-Fixing Micro-Management Of Music Royalties

Seton Motley is the president of Less Government, a DC-based non-profit organization dedicated to reducing the power of government and protecting the First Amendment from governmental assault.

One of America's leading authorities on technology and telecom policy, Motley is a writer, television and radio commentator, political and policy strategist, lecturer, debater, activist, and policy advisor to The Heartland Institute.

I’m a lifelong conservative – and a retired musician. One thing that vexed me as I chased a magical, mystical record deal – was how bizarre and obnoxious was the system to divvy up the money from the hits.

The font of all this bizarre obnoxiousness – is the federal government. The Feds bizarrely, obnoxiously run the royalties show. As a less-government-loving songwriter – things like this flummoxed me: “First, there is the calculation of mechanical royalties for writers and publishers….In the United States, the royalties are based on a ‘statutory rate’ set by the U.S. Congress.”

This is the antithesis of a free market – where the participants negotiate with each other to get the best respective deals. This is a government lobbying contest – where the participant with the most campaign contributions and K Street clout gets an uber-favorable royalty rate from those world-renowned music industry experts in Washington, D.C.

Here in Reality – who is nigh always going to win at that game? People like me – the newly-signed singer-songwriter who just quit the bartending gig he held down to be able to eat? Or mega-record companies like Columbia Music – still counting their massive coin from Adele’s latest multi-platinum smash? (Oh – and mega-company Columbia…is actually a subsidiary of even-more-mega Sony Music Entertainment.)

In the freest of free markets, I-the-newly-signed would be at a fairly large negotiating disadvantage against these mammoth music machines. In this government-rigged system – I have ZERO chance of out crony-ing them in Congress.

But then came Donald Trump. Leader of the Reality Revolution – and champion of the Little Guy. The manufacturing line worker, the electrician, the plumber – and (whether most realize it or not) the musician.

Big Music, and Big Entertainment in totality, did everything they could to stop him – and ensconce in the White House his opponent Hillary Clinton: “Together they donated $6,835,455 to Hillary Clinton compared to only $139,429 for Donald Trump.” (Trump having trouble securing Inauguration entertainers looks a little different now, does it not?)

And well, here’s President Trump anyway. And he has spent his first week undoing all sorts of longstanding DC stupidity. Big Music is afraid their cozy-Congressional-cronyism may be next on Trump’s To Undo List.

And it should be. As with all things, Trump’s focus has been nigh totally deregulatory. Trump is looking to lose as many government impediments to the private marketplace as possible. A government-run sector – like music royalties – doesn’t come even close to fitting the Trump less-government-model.

“They pushed (the Justice Department in December to move) to what is known as a ‘fractional’ licensing system, under which businesses would have to negotiate music rights with all owners of rights to a song. Now, one owner is sufficient to license a song, the licenses are not exclusive so other co-owners can seek their own deals, and all proceeds must be distributed fairly.

“These are the rights to the compositions themselves, not just the playing of the music. So we’re not talking about a four-piece band but about potentially 10-20 or even more people involved in writing a song. Today, restaurants, bars, etc., buy libraries of millions of works from which to choose. All those deals would be out, and they then would have to negotiate separate deals with every member of every team of writers for every song.

“Obviously, this would grind the industry to a halt. It would expose millions of businesses to increased infringement liability and likely seed a cottage industry of copyright trolls – people who would buy up musical rights solely to disrupt negotiations and drive up prices. Plus, how would the restaurants know they had paid all the songwriters involved? What if people walk in off the street and demand payment? What then?”

“What then” – would be a massive boondoggle of micro-ownership fights anywhere on the planet that plays any music. This would be a government-mandated windfall for Big Music – who would buy any fraction of every song worth anything – and then proceed to screw songwriters out of their coin.

The other government-windfall-recipient would be trial lawyers – who would be billing in every conceivable direction. As everyone with a piece of a song would be suing everyone else with a piece of a song – and everyone on the planet who plays them.

That is – if the average, down-and-out songwriter can afford to go toe-to-toe, lawyer-to-lawyers with the average Big Music mega-company. Most can not. So most – will just get screwed.

This is what happens when government holds the fate of your sector in its hands – one incredibly heinous nightmare mess after another.